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Queens Moat Houses (QMH) is a hotel operator that runsmore than 60 hotels in three European countries through three subsidiary divisions.
Since its second rescue from insolvency (in 2004), the group has moved away from being an owner-operator to becoming a franchisee.

Most of the hotels run by Moat House Hotels in the UK have switched from the Moat House brand to become Holiday Inns and  Crowne Plazas.

Queens Hotels in Germany operates properties under the Holiday Inn, Queens hotel and Best Western Queens hotel brands. In the Netherlands, most of the hotels run by subsidiary Bilderberg Hotels are individually named.

Timeline

• 1967: John Bairstow founds Moat House when he converts his home in Essex into the 38-bedroom Brentwood Moat House (named after the home’s former moat). Early acquisitions are mostly in and around East Anglia.
• October 1972: The group expands from four hotels and a country club to one with 13 hotels following a merger with Queens Modern hotels. The enlarged group is called Queens Modern Hotels until 1973 when the Queens Moat Houses name is adopted.
• 1975: The Management Incentive Scheme is launched, in which managers pay a fee to run the hotels for 12 months and keep the profits or incur the losses.
• 1979: The group now has 18 hotels and six pubs/banqueting units.
• March 1982: QMH buys County Hotels from Grand Metropolitan for £30m, doubling its size to just over 50 hotels. In May it becomes a public limited company.
• 1985: The group buys its first three Holiday Inns in the UK, which become Moat Houses.
• 1986: QMH ventures overseas with the acquisition of Holiday Inns in Liege, Belgium, and Kassel, Germany.
• 1987: The group buys the Bilderberg group’s 12 hotels and six restaurants in the Netherlands for £15.5m but also takes on its £27m debt.
• 1987-1998: Overseas expansion accelerates with the acquisition of eight Holiday Inns from Globana (Germany). QMH also buys 23 Crest hotels from Bass in Germany, Holland and Belgium for £169.75m. The Crest hotels largely take the Queens name.
• June 1990: QMH buys Norfolk Capital Group for £177m, adding fifteen hotels, the Sloane Club, three St James’s clubs and seven inns to the group.
• 1991: The group buys eight hotels in France and two in Belgium for £77m in a complex deals that loses it £40m. To reduce its high gearing, QMH enters a number of sale-and-leaseback deals on hotels in the UK and Frankfurt.
• 1993: QMH – which now has 190 hotels in 11 countries – is hit by the second biggest corporate crash in British history as evidence of dubious accounting practices emerge. A week before publishing its preliminary results on 7 April, the group suspends its shares and instigates a review of its business. In October, it reveals a £1.4b loss for 1992 rather than the forecast £85m profit. A new management team headed by Andrew Coppell is installed to rescue the company from collapse.
• 1994: QMH agrees terms with the banks to restructure its £1.4m debt and relists on the stock exchange in May 1995 when the last of the lenders agree. Its market capitalisation is just £57.8m, down from 1991’s peak of £950m.
• April 1995: The group puts its non-core UK hotels into a division called County Hotels for planned disposal. It has already sold 13 properties.
• February 1997: The 25 properties in the County Hotels division are sold to management buy-in team headed by Charles Holmes for £91.5m (they are later acquired by Regal Hotels in 1997). QMH now has 121 hotels and plans to trim down its European presence.
• 1998: QMH sells 11 French and Belgian hotels to Westmont Hospitality for £42m and earmarks up to 14 German hotels for disposal. This will leave it with 95 hotels in the UK, Germany and Holland.
• 2002: After earlier signs of recovery, QHM reports an 83% plunge in pre-tax profit from £25.3m to £4.3m for 2001.
• February 2003: QMH reaches a 10-year franchise agreement with Six Continents to use the Holiday Inn name on 26 hotels, mostly in Germany.
• August 2003: QMH hires investment bank Morgan Stanley to conduct a strategic review of the business after struggling to meet its debt repayments. Delays in reaching agreement with its lenders leads to the suspension of its shares in September and the delay of its 2003 accounts.
• January 2004: QMH, which has been in breach of its banking covenants since the end of 2003, puts itself on the market. The plan is to sell its UK, Dutch and German divisions separately.
• October 2004: Whitehall 2001 – a takeover vehicle for investment bank Goldman Sachs – buys QMH as part of a £544m restructuring deal to stave off insolvency. Under the deal, the group’s £640m debt is reduced to £71m. QMH now has about 80 hotels in three countries.
• August 2005: QMH signs a deal with InterContinental Hotels to convert 11 UK properties into Holiday Inns and two into Crowne Plazas by the end of the year.
• October 2005: QMH sells nine UK Moat House hotels to Jefferson Hotels, which leases eight properties to Rezidor SAS and gives Rezidor the management contract for the ninth. All are to be rebranded as Park Inns.
• January 2006: The group sells the Cheltenham Queens Moat hotel to QHotels for an estimated £19m.
• April 2006: QMH announces a £100m refurbishment programme which will include adding rooms to existing hotels. The group also says it will discontinue the Moat House name, which now exists on just three properties. The rest will trade under the Holiday Inn and Crowne Plaza brands. Only Cambridge Garden House and Oakley Court in Windsor will retain indepedent names.
  20 hotels: discontinue MH name, spend £50m+ upgrading portfolio.
  MD richard moore. Adding rooms. since takeover, moved from owner-operator to franchisee
  18 converted or being converted to HI, CP and BW. only Cambridge Garden House and Oakley Court hotel in Windsor will remain independent QMH properties.
  

Operating data

The last published financial figures for the group show a 2003 turnover of £323.7m (2002: £324.4m) and a pre-tax loss of £44.4m (2003: -£4.6m) after exceptional costs of £26.2m.

Turnover in the six months to 27 June 2004 was £147.9m (2003: £156m)

Total number of hotels: 63

Moat House Hotels (UK)

Number of hotels: 20
Holiday Inn: 12 (Bolton, Doncaster, Harrogate, London Elstree, London Shepperton, Luton, Manchester, Newcastle, Peterborough, Plymouth, Solihull, Stratford upon Avon)
Crowne Plaza: 3 (Chester, Glasgow, Nottingham)
Moat House hotels: 2 (Reading, Stoke)
Unbranded hotels: 2 (Cambridge Garden House hotel in Cambridge, Oakley Court hotel in Windsor)

Queens Hotels (Germany)

Number of hotels: 22
Most are Holiday Inns, apart from five Best Western Queens hotels and a Queens hotel in Hanover.

Bilderberg Hotels and Restaurants (Netherlands)

Number of hotels: 21
Most hotels are individually named, apart from one Crowne Plaza.

Key directors

Managing director, UK: Richard Moore

Contact

Queens Court
9-17 Eastern Road
Romford
Essex
RM1 3NG

Tel: 01708 730 522
Fax: 01708 762 691

E-mail:
Website: http://www.moathousehotels.com

Commentary

The story of QMH is one of a meteoric rise and of an equally meteoric crash. Its impressive growth during the 1980s to become the UK’s third largest hotel group with a strong Continental presence was, it emerged, all founded upon a lie.

The government enquiry into the group’s financial crisis of 1993 (only published in 2004) found widespread evidence of “unconventional and unacceptable accounting policies and practices”.

It describes poor corporate governance, minimal central administration, no proper appraisals of acquisitions, no serious performance, abuse of the Management Incentive Scheme, and serious failings by its advisors.

The damning report concludes that “from at least 1975 QMH never made genuine profits at the level it reported but at levels which were far from impressive”.

It adds that, had the inflation of results “been detected at an early enough stage, and there is every reason it should have been at the least at the time of the 1982 rights issue to acquire County Hotels, it is unlikely that QMH would have grown beyond a small group.

The new managers installed in 1993 made a game effort to knock the company into shape, trimming down its portfolio and reducing its debt. And for a while it looked as though they might pull it off.

But, burdened by steep debt from day one, the group buckled under the bad times that hit the hotel sector from around 2001 – the economic recession, the foot-and-mouth outbreak, the 11 September terrorist attacks on New York, the Gulf War, and the SARs epidemic.

It finally faced insolvency again in 2004 until Whitehall 2001, a subsidiary of investment bank Goldman Sachs, came up with a rescue package.

Since then, the group has been undergoing a major restructure, and has moved from being an owner-operator to a franchisee. Most of the UK Moat Houses have been rebranded under the Holiday Inn and Crowne Plaza brands.